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FM HONG KONG
TO
IMMEDIATE FCO
TELNO 1810
OF 020945Z JUNE 89
a
INFO IMMEDIATE WASHINGTON, PEKING
HK900
STATE OF HONG KONG MARKET
2 JUNE
1989
38
151371
MDHIAN 7361
SUMMARY
THE HANG SENG INDEX DRIFTED DOWN 14 POINTS IN LACKLUSTRE TRADING. THE MONEY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR EXCHANGE RATE LITTLE CHANGED.
DETAILS
2. FOLLOWING THE 54-POINT DROP ON THURSDAY, THE HANG SENG INDEX FELL BY 16 POINTS IN THE FIRST HALF HOUR OF TRADING TODAY. THE INDEX CONTINUED TO DRIFT LOWER FOR THE REST OF THE MORNING AND CLOSED AT 2649, WITH A LOSS OF 40 POINTS. IN THE AFTERNOON, THE INDEX REBOUNDED AND CLOSED AT 2675. THE TOTAL LOSS FOR THE DAY WAS 14 POINTS, WITH A TURNOVER OF HKDOLLARS 1.42 BILLION.
3. THE CONTINUED UNCERTAINTY OVER THE POLITICAL SITUATION IN CHINA IS REFLECTED IN THE DOWNWARD DRIFT OF THE HANG SENG INDEX. THE NEWS OF CLAMPDOWN OF THE FOREIGN MEDIA DID NOT PROVOKE DRAMATIC SELLING. HOWEVER, THERE WAS AN APPARENT LACK OF BUYING INTEREST IN THE MARKET SINCE THE LAST STEADY TRADING DAY ON 18 MAY 1989, THE INDEX HAS FALLEN BY 602 POINTS, REPRESENTING A TOTAL LOSS OF 18 PERCENT.
4. TRADING IN THE HANG SENG INDEX FUTURES MARKET REMAINED LIGHT. A
TOTAL OF 1343 CONTRACTS WERE TRADED. THE JUNE CONTRACT CLOSED AT 2667, A 8-POINT DISCOUNT TO THE SPOT MARKET. THE AUGUST CONTRACT CLOSED AT 2705, UNCHANGED FROM YESTERDAY AT A 13-POINT PREMIUM TO THE SPOT MARKET. THERE WAS NO TRADING IN THE OCTOBER AND THE
DECEMBER CONTRACTS DUE TO LARGE VARIANCES OF 50 AND 100 POINTS
RESPECTIVELY BETWEEN BID AND ASK PRICES.
5. THE MONEY MARKET REMAINED STEADY TODAY WITH THE HONG KONG DOLLAR EXCHANGE RATE CLOSING LITTLE CHANGED, AS WERE INTEREST RATES.
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